Daktronics, Inc. Announces First Quarter Fiscal 2014 Results

BROOKINGS, S.D., Aug. 20, 2013 (GLOBE NEWSWIRE) -- Daktronics, Inc. (Nasdaq:DAKT) today reported fiscal 2014 first quarter net sales of $138.7 million and net income of $5.7 million, or $0.13 per diluted share, compared to net sales of $132.9 million and net income of $6.7 million, or $0.16 per diluted share, for the first quarter of fiscal 2013. Fiscal 2014 first quarter orders were $159.3 million compared to $173.5 million for the first quarter of fiscal 2013. Backlog at the end of the fiscal 2014 first quarter was $167 million, compared with a backlog of $164 million a year earlier and $141 million at the end of the fourth quarter of fiscal 2013.

Free cash flow, defined as cash provided by operations less net purchases of property and equipment, was $(8.6) million for the first three months of fiscal 2014, compared to $15.2 million for the same period in fiscal 2013. Cash and marketable securities at the end of the first quarter of fiscal 2014 were $46.8 million, which compares to $64.7 million at the end of fiscal 2013 and $63.9 million at the end of the first quarter of fiscal 2013.

"We are pleased with our success in booking orders during the quarter. Last year's first quarter was a record level of orders, so it is a tough comparable. We were able to achieve a higher level of sales, and also ended with a slightly higher backlog as compared to the fiscal 2013 first and fourth quarters," said Jim Morgan, president and chief executive officer.

Gross profit levels were lower compared to the first quarter of fiscal 2013 due to inherent variability in gross profit levels typical with large projects. Operating expenses in the fiscal 2014 first quarter increased slightly as a percentage of sales to 19.4 percent.

Orders

  • Orders in the Commercial business unit were down approximately 17 percent in the first quarter of fiscal 2014 compared to the first quarter of fiscal 2013. The decrease in orders was primarily the result of the volatility in the timing of orders in our digital billboard and our large video contract business.  
  • Orders in the Live Events business unit rose approximately 33 percent compared to the first quarter of fiscal 2013, and included orders for two large video display systems totaling approximately $20 million during the quarter.  
  • Orders in the Schools and Theatres business unit declined by approximately 17 percent for the first quarter of fiscal 2014 compared to the same period in fiscal 2013. Although the number of video projects for high schools was about the same as last year, the average selling price this year was less.  
  • Orders in the Transportation business unit were down approximately 56 percent compared to the same period in fiscal 2013, primarily as a result of booking the LAX Bradley International Terminal project worth approximately $20 million during the first quarter of fiscal 2013. In comparing quarterly results, excluding the LAX project, orders increased by approximately $2 million.  
  • Orders in the International business unit were down approximately 6 percent over the first quarter of fiscal 2013. The decrease is due to the historic volatility in timing on large orders. We have had continued strong success in the Australian region and secured orders of approximately $7 million there during the quarter.

Outlook

Reece Kurtenbach, who will become the CEO for the company on September 1, added, "We continued to see a strong pipeline in the worldwide marketplace during the first quarter, and we continue to be optimistic in our ability to secure the orders to support modest sales growth in fiscal 2014. We began shipping our new LED outdoor surface-mount technology during the first quarter of fiscal 2014 and are seeing strong interest in this product. We continue to focus on our strategic goals to improve operating margins, selecting initiatives across the company to increase gross profit margins and control operating expenses."

Webcast Information

The company will host a conference call and webcast to discuss its financial results today at 10:00 am (Central Time). This call will be broadcast live at http://investor.daktronics.com and available for replay shortly after the event.

About Daktronics

Daktronics has strong leadership positions in, and is the world's largest supplier of, large screen video displays, electronic scoreboards, LED text and graphics displays, and related control systems. The company excels in the control of display systems, including those that require integration of multiple complex displays showing real-time information, graphics, animation, and video. Daktronics designs, manufactures, markets and services display systems for customers around the world in four domestic business units:  Live Events, Commercial, Schools and Theatres and Transportation, and one International business unit. For more information, visit the company's World Wide Web site at: http://www.daktronics.com, e-mail the company at investor@daktronics.com, call (605) 692-0200 or toll-free (800) 843-5843 in the United States or write to the company at 201 Daktronics Dr., PO Box 5128, Brookings, S.D. 57006-5128.

Safe Harbor Statement

Cautionary Notice: In addition to statements of historical fact, this news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and is intended to enjoy the protection of that Act.  These forward-looking statements reflect the Company's expectations or beliefs concerning future events. The Company cautions that these and similar statements involve risk and uncertainties which could cause actual results to differ materially from our expectations, including, but not limited to, changes in economic and market conditions, management of growth, timing and magnitude of future contracts, fluctuations in margins, the introduction of new products and technology, the impact of adverse weather conditions and other risks noted in the Company's SEC filings, including its Annual Report on Form 10-K for its 2013 fiscal year.  Forward-looking statements are made in the context of information available as of the date stated. The Company undertakes no obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur.
 
Daktronics, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
     
  Three Months Ended
   July 27,   July 28, 
   2013   2012 
     
Net sales  $ 138,722  $ 132,919
Cost of goods sold  103,221  96,529
Gross profit  35,501  36,390
     
Operating expenses:    
Selling expense  13,617  13,080
General and administrative  7,299  6,581
Product design and development  5,989  6,021
   26,905  25,682
Operating income  8,596  10,708
     
Nonoperating income (expense):    
Interest income  343  431
Interest expense  (115)  (87)
Other (expense) income, net  (392)  (180)
     
Income before income taxes  8,432  10,872
Income tax expense  2,712  4,194
Net income  $ 5,720  $ 6,678
     
Weighted average shares outstanding:    
Basic  42,528  42,068
Diluted  42,766  42,141
     
Earnings per share:    
Basic $ 0.13 $ 0.16
Diluted $ 0.13 $ 0.16
     
Cash dividend declared per share $ 0.120 $ 0.115
 
 
Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands)
     
   July 27,   April 27, 
   2013   2013 
   (unaudited)   
ASSETS    
CURRENT ASSETS:    
Cash, cash equivalents and restricted cash $ 22,165 $ 40,676
Marketable securities  24,636  24,052
Accounts receivable, net  86,921  63,227
Inventories, net  58,912  49,045
Costs and estimated earnings in excess of billings  35,332  39,355
Current maturities of long-term receivables  4,944  4,807
Prepaid expenses and other assets  5,505  6,185
Deferred income taxes  13,157  12,755
Income tax receivables  961  46
Total current assets  252,533  240,148
     
Long-term receivables, less current maturities  10,486  11,325
Goodwill  4,613  3,306
Intangibles, net  2,900  1,181
Advertising rights, net and other assets  773  772
Deferred income taxes  1,059  1,061
   19,831  17,645
PROPERTY AND EQUIPMENT:    
Land  2,116  1,497
Buildings  59,198  57,012
Machinery and equipment  68,226  65,600
Office furniture and equipment  16,109  16,118
Computer software and hardware  42,362  41,745
Equipment held for rental  868  868
Demonstration equipment  8,359  8,400
Transportation equipment  4,203  4,026
   201,441  195,266
Less accumulated depreciation  136,915  133,641
   64,526  61,625
TOTAL ASSETS $ 336,890  $ 319,418
 
 
Daktronics, Inc. and Subsidiaries
Consolidated Balance Sheets (continued)
(in thousands)
     
     
   July 27,   April 27, 
   2013   2013 
   (unaudited)   
LIABILITIES AND SHAREHOLDERS' EQUITY    
CURRENT LIABILITIES:    
Notes payable, bank $ 264 $ --
Accounts payable  48,916  38,651
Accrued expenses  21,696  24,331
Warranty obligations  13,433  13,933
Billings in excess of costs and estimated earnings  13,824  14,245
Customer deposits (billed or collected)  18,870  12,375
Deferred revenue (billed or collected)  7,421  9,112
Current portion of other long-term obligations  890  356
Income taxes payable  1,420  1,689
Total current liabilities  126,734  114,692
     
     
Long-term warranty obligations   11,554  11,213
Long-term deferred revenue (billed or collected)  4,909  4,424
Other long-term obligations, less current maturities  3,037  843
Total long-term liabilities  19,500  16,480
TOTAL LIABILITIES  146,234  131,172
     
SHAREHOLDERS' EQUITY:    
Common stock  38,489  37,429
Additional paid-in capital  27,919  27,194
Retained earnings  124,373  123,750
Treasury stock, at cost  (9)  (9)
Accumulated other comprehensive (loss) income  (116)  (118)
TOTAL SHAREHOLDERS' EQUITY  190,656  188,246
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 336,890 $ 319,418
 
 
Daktronics, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
     
  Three Months Ended
  July 27,  July 28, 
   2013  2012
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income $ 5,720 $ 6,678
Adjustments to reconcile net income to net cash (used in) provided by operating activities:    
Depreciation  3,757  3,819
Amortization  65  57
Amortization of premium/discount on marketable securities  59  48
(Gain) loss on sale of property and equipment  (31)  3
Share-based compensation  722  762
Excess tax benefits from share-based compensation  (3)  (2)
Provision for doubtful accounts  417  (281)
Deferred income taxes, net  (400)  19
Change in operating assets and liabilities  (14,924)  5,405
Net cash (used in) provided by operating activities  (4,618)  16,508
     
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchases of property and equipment  (4,042)  (1,443)
Proceeds from sale of property and equipment  68  92
Purchases of marketable securities  (1,187)  (3,857)
Proceeds from sales or maturities of marketable securities  500  3,999
Acquistions, net of cash acquired  (1,298)  --
Net cash used in investing activities  (5,959)  (1,209)
     
CASH FLOWS FROM FINANCING ACTIVITIES:    
Payments on notes payable  --  (982)
Proceeds from exercise of stock options  293  58
Excess tax benefits from share-based compensation  3  2
Principal payments on long-term obligations  (3,374)  --
Dividends paid  (5,097)  (4,832)
Net cash used in financing activities  (8,175)  (5,754)
     
EFFECT OF EXCHANGE RATE CHANGES ON CASH  246  (128)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS  (18,506)  9,417
     
CASH AND CASH EQUIVALENTS:    
 Beginning of period  40,628  29,423
 End of period $ 22,122 $ 38,840
 
 
Daktronics, Inc. and Subsidiaries
Net Sales and Orders by Business Unit
(in thousands)
(unaudited)
     
     
  Three Months Ended
   July 27,   July 28, 
   2013   2012 
Net Sales:    
Commercial $ 33,701 $ 38,356
Live Events  55,077  44,509
Schools & Theatres  17,917  18,174
Transportation  13,042  16,596
International  18,985  15,284
   $ 138,722 $ 132,919
     
Orders:    
Commercial $ 36,975 $ 44,599
Live Events  67,400  50,699
Schools & Theatres  19,551  23,458
Transportation  13,969  32,036
International  21,388  22,750
  $ 159,283 $ 173,542
 
Reconciliation of Cash Flow (used in) Provided by Operating Activities to Free Cash Flow
(in thousands)
(unaudited)
   Three Months Ended
  July 27, July 28,
  2013 2012
Net cash (used in) provided by operating activities $ (4,618) $ 16,508
Purchases of property and equipment  (4,042)  (1,443)
Proceeds from sales of property and equipment  68  92
Free cash flow $ (8,592) $ 15,157

In evaluating its business, Daktronics considers and uses free cash flow as a key measure of its operating performance. The term free cash flow is not defined under U.S. generally accepted accounting principles ("GAAP") and is not a measure of operating income, cash flows from operating activities or other GAAP figures and should not be considered alternatives to those computations. Free cash flow is intended to provide information that may be useful for investors when assessing period to period results.  
CONTACT: INVESTOR RELATIONS:         Sheila Anderson, Chief Financial Officer         (605) 692-0200         Investor@daktronics.com

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